Explanation:

The correct answer is C because the upward asset revaluation decreases the debt-to-assets ratio, thereby improving the company's solvency ratio. The debt-to-assets ratio is calculated as total debt divided by total assets. Under the revaluation model, an initial upward revaluation increases the carrying amount of the asset class, which bypasses the income statement and directly increases equity under the revaluation surplus. This results in an increase in total assets and total equity, while total debt remains unchanged. Consequently, the numerator (total debt) remains the same, while the denominator (total assets) increases, leading to a lower debt-to-assets ratio.

Incorrect Options:

• A: The quick ratio is unaffected by the upward asset revaluation. The quick ratio is calculated as (cash + short-term marketable investments + receivables) divided by current liabilities. Since the revaluation only impacts property, plant, and equipment (PP&E) and the surplus account in equity, neither the numerator nor the denominator of the quick ratio is affected.
• B: The total asset turnover ratio decreases due to the upward asset revaluation. This ratio is calculated as revenue divided by average total assets. The revaluation increases total assets (denominator) without affecting revenue (numerator), resulting in a lower total asset turnover ratio.